Urethane Blog

Housing Update

November 26, 2024

Macro update
Housing activity in 2024 reflects a continued US housing shortage, as demand far exceeds available supply. There has been a mix of trends across existing home sales, new home sales and multi-family. The combination of elevated mortgage rates, rising home values, and limited inventory has constrained existing home sales activity to levels 25% below the 2017-2019 average pace.

In contrast, new home sales have experienced stronger demand, modestly above pre-pandemic levels. Multi-family construction activity has been steadily declining since mid-2023 but remains elevated in a long-term context.

For existing home sales, a key to unlocking more activity would be lower mortgage rates. We normally expect that a 100bp reduction in primary mortgage rates could translate to a 10% rise in existing home sales over the following six months. Given our outlook for modestly lower interest rates in 2025, we expect housing sales could rise in the low single digit range. Our outlook for housing starts is stable with the 2024 average of 1.35 million.

The preliminary PMI surveys for November indicate a continuation of recent trends across the major sectors of the economy. Services activity remains resilient, with readings in the high 50s. Manufacturing has been more subdued with a reading below 50 for the past five months.